China in Africa: The Real Story

The tariff list is finally public. What is this list and why is this important?

In 2003, Chinese leader Wen Jiabao pledged to give tariff free access to an unspecified number of exports from Africa's least developed countries (LDCs). At first, 190 products were covered. In November 2006 (at the Forum on China Africa Cooperation Beijing summit) the Chinese promised to increase this list to 440. But it has been impossible for most people (like me) to get a list. Now Jeremy Stevens and Simon Freemantle at Standard Bank's Economic Research Group have published (courtesy of China's Ministry of Commerce and Beijing Axis) the full list of 454 product lines for which China is giving tariff-free access to African LDCs. (I received it as a pdf file, which I can't find a way to post here, but you should be able to get the list by registering at the Standard Bank site highlighted above.)

At least three-quarters of the products are industrial goods: vehicle spare parts, bicycles, soap, plastic products, leather wallets, cotton fabric and t-shirts, umbrellas, ball-point pens, table lamps, refined copper products, diesel generators, and fish hooks among them. There is a clear correspondence between these items, and China's domestic restructuring plans. As I note in The Dragon's Gift, China's government wants its companies at home to move up the value-chain. Just a few weeks ago Guangdong province announced that it was raising provincial level wages by 20 percent. The products on the list are mainly from entry-level industries that Chinese planners would like to move beyond.

African governments that want to foster manufacturing investment now have a list of products for which they might offer their own incentives. Some Chinese companies will be looking to relocate to Africa in order to export back to China, duty-free. Other Chinese firms in Africa are already producing products like sesame (Senegal) and plastics (Nigeria) and spun cotton/synthetics (Mauritius). Some have Chinese markets in mind. But African companies can equally benefit from strategic targeting of their products to the Chinese market. At the same time, it's clear that a lot of compromise went into this list and not all LDC African manufactured products are eligible. Decaf roasted coffee is on the list, but not regular processed coffee, for example. There are a few other surprise products, including dental fittings, electric alarm clocks, and bow ties.